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Mid sized businesses lose £millions every year
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29/05/2007
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Findings from research conducted by Wax Digital, the spend management software company, shows that where organisations are still relying on manual processes to drive indirect spend control, typically 41% of all transactions are ‘maverick spend’ - that is to say, uncontrolled.
The study looked at the return on investment case for eProcurement across the company’s own customers and a range of mid to large sized UK business, and found that the cost of maverick goods is on average 16% higher than contracted goods from preferred suppliers.
Where eProcurement is implemented, companies have been able to eliminate maverick spend almost completely and deliver cost reductions across all indirect spend categories by in excess of 10%.
“Very often the first many organisations know of their indirect spend is when an invoice arrives from the supplier,” said Daniel Ball, director, Wax Digital.
“They may have processes in place to get approval after the fact, assigning cost codes and so forth, but even then users can easily be overwhelmed by the volume of exceptions and simply assign and approve invoices as a matter of course.”
An on-demand eProcurement system, which can be deployed right across an organisation via a web browser allows spend to be authorised before it is committed all but eliminating ‘maverick spend’ and allowing only ‘on-contract’ buying.
Ball added: “Furthermore, we have seen that the implementation of strict spend control across indirect categories also leads to a fall in total spend volumes of up to 4%, again delivering significant bottom line savings and delivering a return on investment that can be measured in months.”
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Author
Chris Rowlands
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